IRS addresses issues in two administrative actions

October 23, 2016

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The IRS has publicized two administrative actions, one about employer identification numbers and the other about IRS access to a taxpayer’s email.

With regard to employer identification numbers (EINs), the IRS issued final regulations requiring taxpayers that obtain EINs to update their information with the IRS. The regulations will apply beginning Jan. 1, 2014, to give the IRS time to publish the relevant forms and instructions.

Apparently, the IRS issues many EINs to nominees that act on the applicant’s behalf. With the passage of time, these nominees may no longer be authorized to represent the applicant.

To address this problem, the IRS revised Form SS-4, Application for Employer Identification Number, to require the disclosure of the applicant’s responsible party and that person’s Social Security number, individual taxpayer identification number or EIN. The definition of “responsible party” depends on the type of entity applying for the EIN and is in the Form SS-4 instructions.

The final regulations require any person issued an EIN to provide updated information to the IRS. The IRS will publish a form to use to disclose the correct application information to the IRS. The form will require periodic updates of the name and taxpayer identifying number of the responsible party.

The regulations apply to all persons possessing an EIN on or after Jan. 1, 2014. Therefore, the rules apply retroactively and not just to persons who applied for, or were issued, an EIN after the effective date.

Separately, the IRS announced a new policy regarding how it will request emails from an Internet service provider (ISP). According to Policy Statement 4-120, the IRS will obtain a search warrant “in all cases when seeking … the content of email communications stored by the ISP.” In addition, the policy statement says the IRS will not seek emails during civil administrative proceedings.